Warning of more fines on interbank benchmark rates

Fines for the manipulation of Libor may not be the end of the story as regulators in other jurisdictions investigate their national benchmark interest rates, according to Kevin Milne, CEO of Rate Validation Services.

Fines for the manipulation of Libor may not
be the end of the story as regulators in other jurisdictions investigate their
national benchmark interest rates, according to Kevin Milne, CEO of Rate
Validation Services.

Libor continues to hit headlines with
Rabobank fined $1 billion this week and its CEO, Piet Moerland, forced to step
down for its part in the rate-fixing scandal.

However, Libor is just one of around 50
‘ibors’ which benchmarks interbank offered rates in a variety of countries and
currencies, and Milne said regulators are now turning their eyes to these
lesser known areas.

"Libor has been getting a lot of
attention because it's the most widely used of these benchmarks, but there are
dozens of other ibors based on other currencies, and different jurisdictions
are now looking at these to see if there has been manipulation and if they can
better administer them," he said.

Milne is currently working closely with
NYSE Euronext, which has been chosen to take over the administration of Libor
from the British Bankers Association and UK regulators to improve the accuracy
and reliability of Libor, but has also spoken to other regulators that are
hoping to do the same for their local benchmark rate.

With regulators examining these other
benchmarks, Milne said it’s likely that they may uncover further evidence of
manipulation.

"We may well see more and even bigger
fines if there has been manipulation of these other benchmarks across Europe
and Asia," he added.

Earlier this week, the International
Organization of Securities Commissions (IOSCO) urged benchmark administrators
to adopt its principles for financial benchmarks by July 2014.

The principles have been approved by the Group
of 20 countries and the Financial Stability Board. IOSCO said adoption of the
19 principles will improve the integrity of benchmarks, including ibors.